Kallas: Budget cuts could save €50 million next year

Coalition meeting.
Coalition meeting. Source: Stenbocki maja

At least €50 million can be cut from next year's budget, Prime Minister Kaja Kallas (Reform) said on Tuesday. While it was originally planned to cut €1 billion, she said this is now seen as unrealistic.

More details can be given in August when the Ministry of Finance publishes its economic forecast, Kallas said. But it is accepted that striking a billion from the budget is unreasonable.

But reductions still need to be made, she told Vikerraadio's "Stuudios on peaminister".

"We should be looking for savings of at least 50 million [euros]. The ambition is higher, but this is realistic," Kallas said it was "very funny to hear" people suggest that making cuts 10 times higher would be simple.

The prime minister did not agree that €50 million is a ridiculously small amount compared to the initial billion-euro target, as it will still be difficult to cut this from the budget.

"This is not ridiculous. I'm not saying that it [the savings] will be €50 million, but that €50 million is more realistic than €500 million. /.../ We were able to map out duplicate activities that can be cut. What came out was that [figure] /.../ it is very difficult to [make] savings there," said Kallas, highlighting education and health care as examples where more money is needed.

She also said savings are needed in her own area of responsibility, the Government Office and the Prime Minister's Office.

Some savings can also be found within the Ministry of Defense. "The less bureaucracy, the more ammunition," Kallas said.

However, she said not raising senior civil servants' salaries, which are linked to indexation, would not create large savings.

"This is another issue worth discussing. [But] It does not, of course, bring big savings," she said.  

The two forecasts issued earlier this year put the projected budget deficit between 4.3 percent and 1.7 percent of GDP.

The Ministry of Finance's spring forecast was much less optimistic than the Bank of Estonia's, which was released earlier this month.

The government will discuss next year's budget strategy after the finance ministry publishes its next report.


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Editor: Marko Tooming, Helen Wright

Source: Stuudios on peaminister

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